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Saturday, September 24, 2011

Exchange Rate Moving Up Agressively

The Peso to US Dollar exchange rate has continued to move in favor of the Greenback in recent weeks. Last week we sat at about $13.80 MXP to $1 USD.

The reason I am posting on this again so soon is that the upswing has been substantial in percentage terms. Just three months ago in June the rate of exchange was about $2 MXP lower per US Dollar at $11.65 MXP to $1 USD.

To put all of this in practical terms:

If you were on a $2,000 budget in the early part of the summer at an $11.65 MXP/ $1 USD exchange rate....your cost of living has now gone down to $1,690 per month with the exchange rate swinging to $13.80 to $1 USD. If you are taking money out of US Banks to pay for your daily/monthly expenses then your cost of living is now cheaper than 90 days ago.

A person making a rent payment of $7,250 MXP per month just had their rent drop about $100 per month over 90 days. That means the rent payment just went from $622 per month to $525. Would you take that?

If you wire transferred $100,000 USD 90 days ago to buy a house, you now only have to transfer roughly $85,000 to buy that same house at this time. Home prices have not really appreciated that much if at all in that time.

This is why you need to watch the exchange rate. That extra $15k will furnish your home, pay for a swimming pool, equip your home with solar or pay for the cost of digging a well. There is alot you can do with 15k in this market. Just things to consider.